Sybil Low by Sybil Low

A recent Forbes article sheds light on the complexities of college tuition pricing, and, alongside valuable insights, offers a new tool to help students understand the true costs of higher education.

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Key Takeaways

  • Many students are deterred by high list prices of colleges without understanding that the actual cost they pay can be significantly lower due to various financial aid options.
  • Forbes has developed a tool that allows prospective students to quickly estimate the net cost of attending any of the 500 schools on its 2023 list of America’s Top Colleges.
  • The article emphasizes the importance of filling out the FAFSA form and explores other aspects of the financial aid process, including the role of institutional aid.

There’s a common misconception among students and their families regarding college costs. Toni Marie O’Daniel, a counselor at Hmong College Prep Academy, emphasizes this issue, noting that “my kids won’t even apply… They’re freaked out” by the high sticker prices of private colleges. This is not just a single sentiment, but a reflection of a national trend where students are increasingly wary of accumulating student debt, swayed by the daunting published prices.

Phillip Levine, an economics professor at Wellesley College, points out that the “only thing that people really understand is the sticker price,” which is often not what students end up paying. One College Board report shows that the average net tuition at private colleges is substantially lower than the list price, illustrating the significant impact of financial aid.

The Forbes Tool: A Game-Changer

Forbes’ new tool aims to demystify the college cost calculation by providing average net cost estimates based on family income. This tool is particularly beneficial for students from low- and middle-income families, who might find that private colleges are more affordable than state schools.

“Students from California families with incomes between $48,001 and $75,000 paid $3,637 at Stanford.”

Even this example contrasts sharply with the higher costs at public universities. The figures provided by Forbes’ new tool are just the tip of the iceberg though. Each student’s financial journey is unique, and the actual cost of college can vary widely based on personal circumstances. This is a vital piece of information for families as they navigate the complex world of college financing. While Forbes’ tool offers a broad brushstroke of costs, the real picture might include a mosaic of other factors. Some schools take a deep dive into your family’s financial health, scrutinizing assets like retirement savings, home equity, and a more granular breakdown of income. For the aspiring scholars and test-takers, schools doling out merit aid might ask for a showcase of academic prowess, including grades and test scores.

But here’s the catch: getting these personalized cost estimates often means wrestling with each college’s net price calculator. These are tools designed to give you a closer look at what you might actually pay, tailored to your unique financial situation. Forbes’ tool serves as a gateway, linking you directly to these calculators for each school on its list. The convenience is undeniable, but be prepared to roll up your sleeves and delve into the finer details of your financial life.

Forbes Unveils Tool to Break Down College Costs for Prospective Students

Toni Marie O’Daniel from Hmong College Prep Academy highlights the practicality of this approach. For many students, especially in the early stages of college planning, getting a ballpark figure quickly is invaluable. It offers a glimpse into the realm of possibilities without getting bogged down in the nitty-gritty of family finances. This quick access to information empowers students, allowing them to chart their educational paths with a clearer understanding of the financial landscape ahead.

However, it’s important to note a significant limitation in the data used by Forbes’ tool. The tool groups all families with an income above $110,000 in the same category. However, this broad categorization can be misleading. For instance, a family earning $120,000 might still be eligible for substantial need-based aid at some of the most expensive private colleges. Conversely, a family with an income of $1 million would not qualify for such aid. This distinction is crucial for families in the higher income bracket as it affects the accuracy of the estimated college costs.

The process of applying for financial aid starts with completing the Free Application for Federal Student Aid (FAFSA). This is an important step in the admission process, as noted by Sean Logan, dean of college counseling at Phillips Academy Andover, who advises all families to complete the FAFSA regardless of income. The FAFSA form, however, has been recently changed a little. The updates were made with an aim of simplifying the process and making it more accessible in general.

Forbes also notes that there are different categories of colleges and, therefore, their pricing strategies vary. Levine categorizes schools into three groups:

  1. well-endowed private colleges,
  2. public colleges,
  3. and private colleges below the top tier.

Each of these has a distinct pricing strategies as well as a special financial aid for students.

The first group are schools like Stanford, Ivy League institutions, Amherst College, and the Massachusetts Institute of Technology. They set high list prices, often exceeding $70,000 or $80,000 annually, because there is a significant demand from students willing to pay these amounts. These institutions have large endowments, which allows them to offer substantial financial aid. For instance, Harvard, with its $51 billion endowment, claims to be more affordable than public colleges for 90% of its students. Families earning less than $85,000 often pay nothing, while those with incomes between $85,000 and $150,000 contribute no more than 10% of their annual income.

Public colleges are institutions that generally have lower list prices, especially for state residents, but offer less financial aid. The College Board reports that the average published cost of attendance at a four-year public college is around $28,840, with a net cost of attendance (COA) of $20,310 after financial aid—a 30% discount. Their financial aid is mainly need-based, with some merit-based components, but they lack the resources to fully subsidize costs like the elite private colleges.

The last group are colleges that often find themselves in a competitive position, vying with state schools for students and elite schools for prestige. To compete, they set higher tuition rates and then discount them significantly through institutional aid, both need-based and merit-based. Levine notes that these schools may set sticker prices at $60,000 to $70,000 but then offer substantial merit aid. In many cases, 100% of the students at these institutions receive some form of aid.


Forbes’ article and tool provide a clearer picture of the actual costs of college education, encouraging students not to dismiss schools based on sticker prices alone. This approach could significantly alter how families approach the college selection process, potentially opening doors to educational opportunities that were previously considered financially out of reach.


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